A framework for time-driven activity-based costing implementation at small and medium enterprises

Reynolds, Arthur; Fourie, Houdini; Erasmus, Lourens J.

doi:10.4102/sajesbm.v10i1.194

Cited by 7 publications

(9 citation statements)

References 9 publications

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“…According to Everaert et al (2008) and Reynolds et al (2018), the calculation methodology with the TDABC costing system contemplates six steps: 1) Identifying various resource groups (departments or processes). 2) Estimating the total costs of each resource group.…”

Section: Tdabc Methodologymentioning

confidence: 99%

Time-Driven Activity-Based Costing in the Assembly Industry

Vedernikova¹,

Siguenza-Guzmán²,

Pesantez³

et al. 2020

AABFJ

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Costs and their determination play a critical role in all manufacturing companies. The traditional costing system has received criticism resulting from the arbitrary allocation of indirect manufacturing costs. As an important initiative to address its weaknesses, new costing methods such as the Time-Driven Activity-Based Costing (TDABC) have emerged. Unfortunately, up to our knowledge, no investigations have been applied in analyzing assembly companies thoroughly nor considering all the processes necessary to obtain the final products. This article explores the TDABC application in the assembly industry through comparison with traditional volume-based costing by focusing on manual and semi-automatized production. Since the research is descriptive, a multiple-case study design was implemented in the assembly of televisions, motorcycles, and printed circuit boards. The developed methodology allowed determining the existence of factory overhead and direct labor cost variances between two different cost accounting systems, which also affected the unit cost of the products. Findings also highlight the benefits of TDABC application in the assembly industry, along with the shortcomings and future potential of research in this area.

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Section: Tdabc Methodologymentioning

confidence: 99%

Time-Driven Activity-Based Costing in the Assembly Industry

Vedernikova¹,

Siguenza-Guzmán²,

Pesantez³

et al. 2020

AABFJ

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show abstract

“…Time-Driven Activity-Based Costing (TBABC) is a tool used to disaggregate and identify the labor activities required for a process to better understand the economic viability of a business (Reynolds et al, 2018). Rather than estimating productivity with known payments, self-reported values or standard costs, the method is based on a detailed account of the time that each activity takes, and the human resources allocated.…”

Section: Time-driven Activity-based Costingmentioning

confidence: 99%

The Cost of Plastics in Compost

Yesaya¹,

Mpanang'ombe²,

Tilley

2021

Front. Sustain.

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In urban Blantyre, there is ample green-waste and widespread interest in compost, but the feedstock is often contaminated with plastics. If composting is going to become more widely implemented, it must be profitable and ideally, competitive with chemical nutrients, however the time and cost associated with plastics removal is currently a bottleneck to profitability. In this study we investigated the financial sustainability of compost production using a Time-Driven Activity-Based Costing method over 16-weeks to identify the types and duration of each activity required. Combining these data with capital and operating costs, we then modeled the profitability of the facility to identify cost-bottlenecks and to determine scenarios that would lead to improved profitability. The results show that it took 1 h 50 min of labor to produce 165-L (0.065 m3) bag of compost. A total of 12.3% of the active labor time was spent sorting out plastics from the organic waste before composting, during composting and from the finished product before packaging. Until similar work is published on the topic, these values cannot be evaluated as being either optimal or wasteful, but rather, serve as a baseline against which future interventions—e.g., source separation, especially at markets can be evaluated. Though based in Malawi, the documented and modeled costs can be converted and scaled by other entrepreneurs/agencies who are interested in estimating the financial feasibility of composting in their own context.

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“…According to Reynolds, Fourie and Erasmus (2018) in a case study to devise a framework for South African SMEs with resource constraints, they adapted the generic steps for TDABC as described by Kaplan and Anderson (2003). They found that it was practical to implement TDABC at a manufacturing SME by extrapolating the cost data from a single product which harnesses all the key activities in the factory.…”

Section: Literature Reviewmentioning

confidence: 99%

“…They concluded that the proposed framework for TDABC model implementation at SMEs revised the generic framework suggested in literature by focusing on key products only and consolidating activities. (Reynolds, Fourie, & Erasmus, 2018) Pernot, Roothooft and Van den Abbeele ( 2007) in a study about inter-library loan (ILL) acquisition and circulation, used of TDABC to assess inter-library loan (ILL) costs and described TDABC as a useful technique to scale back ILL resource costs and to renegotiate ILL service prices based on more precise costs. The authors concluded that TDABC is extremely appropriate to address increasing cost pressures, and its findings can contribute to improve library services at lesser costs.…”

Section: Literature Reviewmentioning

confidence: 99%

Assessing Financial Efficiency with Time-Driven Activity-Based Costing (TDABC) Model: Evidence from International Trading Companies

2021

JRDM

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The allocation of indirect cost associated with a particular service in the most accurate way gives many different options. Understanding logistics process in terms of cost and profitability is a complex task, and there is need to more research in such bases. Traditional costing systems are not able to determine accurately the cost of different cost objects once based mainly on volume measures for costing allocation. With traditional cost systems giving inaccurate results as operations change, there is the need for organizations to implement modern costing annalistic models which can easily be integrated in cases of update on cost drivers or expenditure. In this paper, theories underlying Time-Driven Activity-Based Costing (TDABC) model have been used in a form of case study stimulation to examine how overhead cost can be properly allocated in organizational departments. The author attempts to implement the generic steps of the TDABC cost model as presented by Kaplan and Anderson in a case study to measure the financial efficiency of a logistics procumbent company based in china with clients mostly based in Africa.Traditional costing systems are not able to determine accurately the cost of different cost objects once based mainly on volume measures for costing allocation

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A framework for time-driven activity-based costing implementation at small and medium enterprises

Cited by 7 publications

References 9 publications

Time-Driven Activity-Based Costing in the Assembly Industry

Time-Driven Activity-Based Costing in the Assembly Industry

The Cost of Plastics in Compost

Assessing Financial Efficiency with Time-Driven Activity-Based Costing (TDABC) Model: Evidence from International Trading Companies

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